Are Collectible Gold Coins Really Worth the Investment?

Collecting gold may inspire feelings of fascination and wealth. Jewelry and adornments displayed the beauty of gold for centuries, visible in discoveries such as Tutankhamun's coffinettes (miniature gold coffins). The price of gold on the world market has increased steadily since countries went off the gold standard and allowed fluctuations in the price. Some investors make purchases as a hedge against inflation, with the belief that the value of gold will continue to rise.

History

From 1934 until 1971, the gold standard set the price of gold in the United States at $35 an ounce. In 1971, the United States went off the gold standard, choosing to allow gold to fluctuate with supply and demand. In 2010, gold was valued in excess of $1,000 an ounce. One gold coin, the St. Gaudens double eagle, was produced in the United States as early as 1907 with a face value of $20. This coin contains nearly an ounce of gold and has artistic merit as well as gold value. A recent collectible gold coin is the 2009 gold buffalo, and it contains nearly an ounce of gold also. Whether you choose antique coins or current gold issue may make a difference in price because of rarity of the antique coins.

Significance

Purchasing gold as bullion in bar form or purchasing gold coins may not be the same cost per gram or ounce because coins are art as well as bullion. Collectible gold coins are solid gold, not vermeil or gold wash over silver or another metal. Start by comparing 24-karat gold to 24-karat gold, and grams to grams if you want to compare values. Gold coins may increase in value both because of the increase in the value of the gold itself and because of the rarity or beauty of the coin.

Warning

Advertisers appeal to the public with intrigue and claims that may not be true. Do not count on gold investments as a hedge against inflation. InflationData.com stresses that gold is a crisis hedge, not an inflation hedge. Consumer groups are cautioning investors about the tactics of some gold coin sellers. As a result, legislation in the House of Representatives in the form of HR 6149, The Coin and Precious Metal Disclosure Act, proposes to give consumers a more accurate view of risks involved.

Types

Collectible gold coins have a specific weight and gold content. Websites such as Kitco report the price of gold in ounces of 24-karat gold. Collectible gold coins are professionally graded and sold at prices based on condition as well as gold content. There is also the rarity element, since many gold coins are antique. For new coins, such as the First Spouse gold coins, there may be no rarity element until these coins are no longer available on the market. The U.S. Mint has the ability to adjust the price of these new collectible gold coins to account for fluctuations in the market, and makes adjustments when needed, reports Coin Update News.

Considerations

Whether gold coins are worth the investment has many facets. If you can locate gold coins at prices below the current market value for that weight of gold, they may be more valuable the day you purchase than the amount you paid. If you must pay a premium price for gold coins, they may take years to reach a price to make a profit. There is also the potential that the price of gold may fall, making your coins less valuable for gold content. If you enjoy the beauty of collectible gold coins or the security of ownership, they may be worth the investment in non-tangible ways. The amount of time you have to hold collectible gold coins is a consideration, too. Young people may collect gold coins for retirement since they have years for them to grow in value. If you are of retirement age, consider the time limitations, since collectible gold coins may not increase in value in your lifetime.

References

• King Tut Tutankhamun and the Golden Age of the Pharaohs
• InflationData.com: Gold is a "Crisis Hedge"
• Pocket Change Lottery: The Top 10 Collectibe Gold Coins
• Coin Update News: US Mint Raises Prices for Collectible Gold Coins
• Kitco: Latest Gold News
• Consumer Affairs: Gold 'Investments' May Not Pay Off, Consumer Group Warns